NEW YORK – Pfizer Inc. said yesterday that its earnings will fall 6 percent this year as the company, which has been struggling with patent expirations and drug safety concerns, announced a cost-cutting plan aimed at saving $4 billion by 2008.

Pfizer said the program would help return the company to double-digit earnings growth in 2006 and 2007, and Wall Street responded by driving the company's shares nearly 4 percent higher.

Details were sketchy, but will include staff reductions, changes to purchasing arrangements and possibly more plant closings. Further acquisitions are likely to add new technologies, too, the company said.

Pfizer officials at the drug giant's sprawling research campus in La Jolla did not return telephone calls. Pfizer, which employs about 1,500 locally, left the La Jolla campus largely untouched during the last round of significant layoffs in 2003.

Pfizer's projection for this year fell below analysts' estimates, but the promise of a return to double-digit earnings growth by next year exceeded their expectations.

"There won't be a single 'magic bullet' or 'big bang' new strategy or business model," said Pfizer chairman and CEO Hank McKinnell, speaking to analysts at a conference in New York. "It will take a combination of both long-standing strategies and new approaches to prosper during the next decade."

McKinnell said the company hadn't started to implement the plan. "We have a lot of work to do," he said.

Pfizer said cutting costs will drive earnings growth in 2006, but stronger sales should boost profits in 2007.

It said its 2005 earnings are expected to be $2 per share, short of the $2.13 consensus from analysts surveyed by Thomson Financial and below the $2.12 earned in 2004. Accounting for one-time items, full-year income is estimated at $1.16 per share.

Its longer-term outlook is a sharp contrast to analysts' current estimates for Pfizer's earnings to rise 4.2 percent in 2006 but fall flat again the year after, however. By comparison, the industry's profits are expected to grow by an average of 2.1 percent this year, 6.9 percent in 2006 and 7.4 percent in 2007.

Pfizer's targeted savings amount is double of what analysts were expecting. While the company is looking to trim yearly spending by $4 billion – about 12 percent of its costs – implementing the plan will cost between $5 billion and $6 billion through 2008.

"I was disappointed by the 2005 earnings number," said David Moskowitz, an analyst with Friedman, Billings, Ramsey. He said, however, that Pfizer is taking most of the costs in the first year so that it can resume growth in 2006.

Pfizer declined to give a specific blueprint for the cost cuts, though McKinnell said the employee count of 115,000 would eventually be reduced.

Pfizer said there would be no huge reduction in the sales force, although there would be changes to how it operates. Its U.S. sales force of about 12,000 will have just two representatives per product for each doctor – down from a current level of two to five reps.

"We are restructuring the field force to better meet ongoing customer needs," said Pat Kelly, president of U.S. pharmaceuticals. "We have geographically redeployed. There will be some modest reduction, but that will be achieved through attrition and sales-force management."

McKinnell said there were other areas that could produce significant savings. Pfizer already has a plan to cut its plants to 73 by the end of the year, from 93 two years ago, for example.

While analysts applauded the cost cuts, they remained wary about whether existing and pipeline products would generate enough sales to replace revenues lost as patents expire on some of its most lucrative products

Pfizer is slated to lose as much as $9 billion in revenue in the next four years when patents expire on antidepressant Zoloft, allergy medicine Zyrtec and blood-pressure medicine Norvasc.

Analysts say Pfizer may have to use its $24.4 billion in cash and investments and its $16 billion a year in cash flow to make acquisitions that will add to its product line.

Pfizer announced plans to buy two companies this year, and McKinnell said "the biotech area is a good one (for acquisitions). Prices are down."

That could prove good news for San Diego's cash-hungry cluster of 400 or so life science companies, many of which are small biotechs developing new drugs.

Pfizer has already made an impressive acquisition foray into San Diego County. In January, the drug giant snapped up La Jolla biotech startup Angiosyn, for an undisclosed upfront cash fee and future milestone payments of up to $527 million if a drug makes it to the market.

In February, Pfizer also bought San Diego's privately held Idun Pharmaceuticals for an undisclosed sum. Idun has developed an experimental drug to treat liver damage associated with hepatitis C and liver transplants.

And in 2002, Pfizer acquired shared rights to an experimental sleeping pill developed by San Diego's Neurocrine Biosciences in a deal valued at up to $400 million.

Moskowitz, the analyst, estimated that Pfizer will launch 11 new products in the next 18 to 24 months. And while there may not be a major blockbuster among them, he thinks the critical mass will make up for lost patents.

Others weren't so sure. "I think the 2007 projection could be optimistic," said Albert Rauch, an analyst with A.G. Edwards & Sons.

Pfizer said that it believed its arthritis drugs will resume growth, but analysts don't see that as likely. Bextra and Celebrex are Cox-2 inhibitors, and like Merck & Co.'s Vioxx, they have been linked to increased risk of heart attack and strokes. Sales have fallen.

Pfizer believes the combination of an FDA advisory panel recommendation that the drugs remain on the market and expected new labels should restore doctors' and patients' confidence in the products, which had $4.6 billion in revenues last year.

"I'm not sure about the Cox-2 franchise," said Jason Napodano, an analyst at Zacks Investment Research.

Pfizer also is expecting to repatriate more than $28 billion in overseas profits under a provision in the American Jobs Creation Act that gives a huge tax break this year to U.S. companies who do business overseas but intend to return those funds to its domestic operations.

A tax charge of $2.2 billion will be recorded in first-quarter results, but pending changes to the law could reduce the expense by about $850 million, the company said.

Pfizer shares closed up 97 cents, or 3.7 percent, to $26.90 on the New York Stock Exchange.